Retailers like Big Bazaar, Nilgiris pull Maggi noodles off shelves, await clarity on the issue
The state governments of Kerala, Tamil Nadu, Haryana, Maharashtra and West Bengal deployed officials to randomly collect Maggi noodle samples.
Big Bazaar, Walmart India's Best Price Modern Wholesale, Easy Day, Nilgiris, K Raheja's HyperCity, Savemax Wholesale, Spar and online portal Big Basket said they are withdrawing the brand across India until they get clarity on the safety of the product.
"In the interest of consumer sentiment and concerns, we have taken Maggi noodles off the shelves from all our stores for the time being. We will wait for more clarity from authorities to take the further course of action," said a spokesperson at Future Group, which removed the product across its retail network of over 500 supermarkets including Big Bazaar and Nilgiris stores.
Nestle's stock declined 9.05% to Rs 6,191.10 at the close on the BSE on Wednesday.
"We have decided to withdraw the Maggi 2-minute noodles from our shelves across all 20 Best Price Modern Wholesale stores till further clarity from FSSAI and state food safety authorities," Rajneesh Kumar, VP & head, corporate affairs at Walmart India, said in an email.
What first erupted at the end of April in Uttar Pradesh, where the state food and drug administration (FDA) found excessive levels of lead in Maggi noodles, has now spread across India, prompting other state governments to test the product. The Delhi government said it may file a complaint against Nestle India after lab reports found samples of Maggi noodles to contain monosodium glutamate and excessive lead quantity.
The state governments of Kerala, Tamil Nadu, Haryana, Maharashtra and West Bengal deployed officials to randomly collect Maggi noodle samples of different batches and dates for testing.
"It will have an adverse effect for Maggi sales as a bulk of their larger packs are sold through modern trade. " said Abneesh Roy, associate director at Edelweiss Securities.
Modern trade accounts for almost 10% of Nestle's sales. The stakes are higher for Maggi, which contributes about a third of Nestle's sales, as a prolonged standoff could dent sales from one of its key trade channels. The company's net sales increased 8.4% to .`2,506.8 crore in the March quarter from a year ago.
Nestle didn't respond to an email query seeking comment. The company has not received any orders from any state/Centre FDA authorities to recall Maggi noodle products, except an order from the Uttar Pradesh FDA on April 30, Nestle said in a statement to the BSE on Wednesday. Nestle is cooperating with the authorities who are conducting tests and awaiting the results, it said.
About a week ago, Nestle had directed retailers "not to be defensive" about the controversy and to promote its flagship product even as sales started to slide across India. "Please do not panic with the Maggi news," the world's largest food maker by revenue had written to the organised retail trade.
Retailers said there was lack of clarity from Nestle, due to which they were unable to address the concerns of customers. "As a responsible retailer, we have to focus on our consumers first. We have decided to pull out Maggi noodles from our stores until we are satisfied on its safety concerns," said Darshana Shah, senior VP, marketing, HyperCity. Big Basket's marketing head Vipul Parekh said it will stop delivery of Maggi noodles until further clarity.